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DEDUCTIBLES BAR TREATMENT
I know of three more cases. People who are suffering with their sicknesses but they cannot go through with the operation because the deductibles and all of this are just more than they can manage.
Dr. Todd made a very good point when he said that there are a great number of participants in the medicare program-but there are also a number who don't participate, in Los Angeles particularly.
The people who provide the necessary services charge an awful lot, and some of the senior citizens don't have a pocketful of money.
Even in regard to those people who do participate, I have a couple of complaints-particularly one woman that I know of—who goes to a certain doctor for many years, who has not overcharged.
He participates, but when she goes in for the next appointment, the nurse, who is the secretary of the doctor, makes her feel so bad that she, instead of taking the bill from the doctor and sending it to medicare, she just takes out the last dollar that she has to live on and pays the doctor.
One more point I would like to make, and that is in connection with Medi-Cal, which Speaker Unruh spoke for: It is true that California is one of the States that participates in medicaid. The top income of one single person has to be $167 a month. I come originally from-I am a neighbor of yours, Senator, from New York—where it is quite different.
And something else: I have a complaint that a certain person-particularly—who has recently gone in to apply for Medi-Cal-her income is $107 a month. She was unfortunate in that her husband left her an insurance policy of $1,500.
After an hour and a half of interrogation by the clerk, they found that she was not entitled to Medi-Cal—even though she only gets an income of $107-because she has $1,500 in cash.
Furthermore, according to the law, there is supposed to be an allotment, first of all, of some of the money that is in the bank for livingsupplementing this $107, and also she is entitled to $700 funeral service. That has not been taken into consideration.
It may not always be handled in the same way. Not all interrogators may be the same. But I say that those things happen that discourage dignified people from—even if they cannot get along-to apply for this service.
Thank you very much.
Senator WILLIAMS. That is why we are here-to try to find out what is happening. Our mission is to try to improve situations that should be improved.
Mr. DAVIDSON. That is why I am very happy to come here, because I know that you are very much interested in solving this problem.
Senator WILLIAMS. Thank you very much, gentlemen. You have been most helpful.
It is now 1:26 p.m. We will have one more witness before we recess, and Mr. Robert Thomas is available right now.
STATEMENT OF ROBERT THOMAS, VICE PRESIDENT, BLUE CROSS
OF SOUTHERN CALIFORNIA
Mr. THOMAS. Mr. Chairman, and Senator Randolph, and gentlemen, I am Robert J. Thomas, vice president of Blue Cross of Southern California, with the responsibility for professional and governmental relationships.
It is my pleasure this morning to make, really, a short report on our performance as intermediaries under title 19, which is, as you know, known as Medi-Cal in this State.
In the interest of time and your recess, my remarks here this morning will just be informal.
California's Assembly bill No. 5, which was the enabling legislation to permit implementation of title 19 in this State, was enacted in the fall of 1965 in a manner which permitted the State to take advantage of the existing resources of private enterprise in the administration of health care benefits under this program.
By resources I mean our facilities, our equipment, our staff, our systems, and particularly our experience and experitse in this field.
For example, the organization which I represent has been in the business of health prepayment for more than 30 years. I have a history of having been a hospital administrator for more than 18 years.
In any event, I am pleased to report that in response to requests from State officials, from the medical profession, and from the health field in general, Blue Cross of Northern California, Blue Cross of Southern California, and California Blue Shield, joined together and submitted what turned out to be a successful bid for us to serve as intermediaries under this program on a no-profit, no-loss basis.
Senator WILLIAMS. Is there an advantage there, do you think, instead of the State handling the whole thing itself?
Mr. THOMAS. I think there is, Senator, particularly because of our long experience in the field of health and administration of health benefits.
Because of our close association with institutional providers of care, in my case, and in California Blue Shield's relationship with physicians, we are known to them—we know the ins and outs of the business.
We know the good and bad operators, as it were, and I think in most instances, certainly from the providers' standpoint, they want a buffer between the government and their own activity.
We provide that, and we are, I think, regarded as a part of the health team.
So I think we do provide a service that could not be provided normally through the existing government channels.
Senator WILLIAMS. And has this matter substantially increased costs in Blue Cross—whatever you want to call it-premiums?
Mr. THOMAS. Rates.
Mr. Thomas. Our rate increases have gone hand in hand with the overall increases in the cost of care which we have heard referred to here this morning.
Obviously our rates are set on an actuarial basis, and as costs go up, our rates must go up to cover them.
Senator WILLIAMS. And those rates have to be approved by a department of State government !
Mr. Thomas. Yes. Although we are a nonprofit corporation, we are still subject to the regulations of the State insurance commissionerand those rates are approved by him.
Senator WILLIAMS. As a conclusion on that point, you are in favor of the intermediary, rather than pure government handling the whole program?
Mr. THOMAS. Well, not only am I in favor of it, because we are administering the program, but I know I speak for the professions and the different provider organizations with whom we deal and whom we represent.
Senator WILLIAMS. How did you become intermediary? Did you have to compete on a fitting basis with insurance companies, for example?
Mr. THOMAS. Yes, In this State the intermediary role was let on the basis of bid, and evaluation of bids.
Senator WILLIAMS. Check. Right.
Mr. THOMAS. And even though we joined with California Blue Shield in this bid, I think Dr. Malcolm Todd has spoken quite succinctly about their role.
RELATIONSHIPS WITH PROVIDERS OF SERVICES
And so again in the interest of time, I will limit my remarks just to Blue Cross and its relation with the institutional providers of service, the hospitals, the nursing homes, health agencies, rehabilitation centers, free clinics, and so on.
Now, in the 30 months that this program has been under way in this State, 4,800,000 institutional claims have been paid in behalf of eligible Medi-Cal recipients.
And this amounts to a total expenditure of in excess of $730 million to date.
I am sure that before this fiscal year is out, this will surpass the $1 billion mark.
These payments have been made to more than 1,900 institutional providers in this State. About 560 hospitals, 1,200 nursing homes, 120 home health agencies and free clinics, so I think you can see that Medi-Cal, which sort of sounds like a drink for weight losers, is certainly not a slim program in this State. It is a very large and a very complicated program.
I would like to say right here, if I may, that I feel that our success as an intermediary has been due in no small measure to the rapport and certainly the very capable cooperation that we have had from the State department of health care services.
Each of us has a very important role to play in this program and I think we present an excellent example of private enterprise and government working together in concept.
I would say also, that our Blue Cross policy, since the inception of this program, has been to handle it on the same basis with the same safeguards and at the same level as we handle our own business.
Certainly to insure high quality of care in any of these programs it is necessary to verify that those persons admitted to institutions actually needed to be admitted.
And once they are admitted, we must determine that neither overutilization or underutilization of the institution's facilities, its tests or its treatments, were allowed.
And also we must check to see that the length of stay of the patient is commensurate with the severity of his illness.
I think if we are going to get the fullest economic use of the facilities we have in our community here, it is absolutely imperative that we get people out of the acute beds and into nursing homes and to home health agencies, home care programs or outpatient care, just as soon as we possibly can.
Now again, in the interest of brevity, let me just comment that as far as I can see there are really about three major functions in this intermediary role which I think we are carrying out very vigorously.
The first is to receive and process and pay institutional claims in an efficient manner.
The second is to provide assistance and counseling to providers in the field and to conduct utilization review and medical audit activities in the field to prevent abuses of the program.
And the third, of course, is to perform fiscal audits to verify that costs and charges are compatible for the services rendered.
Each of these functions which is carried out by us can be carried out on our Blue Cross business, on our medicare and our Medi-Cal programs at the same time, and with the same personnel with an appropriate sharing of the costs.
And this, of course, results in considerable economy for each of the participants in these programs.
For example, in the area of claims processing, we receive approximately 40,000 claims a month which involve both medicare and MediCal benefits.
As has been previously mentioned on the basis of the patients entitlement to medicare, many times he can't pay his coinsurance or deductible. Now, if he is eligible for medicare, then Medi-Cal pays these for him.
Because in almost all of the cases we serve as the intermediary for both medicare and Medi-Cal, we can process the claims and make payments under both programs from a single medicare form.
This, of course, is a real saving of time and paperwork-not only for us, but for hospitals and other institutions as well.
In the functions of assisting and counseling and utilization review and medical audit, we have 76 full-time field representatives. And on each visit made by these people, all three of these programs are covered.
So each program really only pays about one-third the cost of each visit that is made.
COMPATIBLE COST REPORTING FORMS
And similarly, in the performance of our fiscal audit, compatible cost reporting forms have been developed so that one audit of the institution's books will suffice for all three programs—again with appropriate sharing of costs.
In this joint administration of medicare and Medi-Cal and Blue Cross, too, I believe we have an excellent mechanism for assisting in the maintenance of high quality care and in an economical manner.
For example, our administrative costs and claims processing, to date, under the Medi-Cal program, is just 771,2 cents per claim. This amounts to one-half of 1 percent of the amount paid for institutional services rendered.
I think you will agree this is a mighty low administrative cost. As the charts that have been filed with your committee will show, the volume of patient care in medicare-in Medi-Cal, rather—is increasing rather dramatically.
More and more eligible people seem to be availing themselves of the Medi-Cal benefits, and each has been seen by a doctor who has determined that the patient needed institutional care.
So I think this way we can see that the program is bringing care to a great many people who apparently needed it before, but for one reason or another had not been getting it.
I think, just in summary, if I may, Senator Williams, I would say that we had many problems at the outset of this program, as can be expected, but there have been a great many improvements in the program since its beginning. A lot are in the mill right now, and coming to fruition.
I am sure we can look forward to a great many more in the very near future.
And with the pros and cons we have heard here this morning, I am pleased to tell you that, all in all, we of Blue Cross can say that we are very proud to have been a part of what we feel is a great program and which is bringing a great deal of good to a lot of people.
If you have any questions, sir, I will be glad to try and answer them.
Senator WILLIAMS. I think you have answered all of the questions that I had prepared to ask.
How many States are included in medicaid, which is your nomenclature-is Medi-Cal?
Mr. Thomas. I don't know. I can speak for this State--well, up around 40, I believe.
Senator WILLIAMS. Is that right? Blue Cross is the agent intermediary in many of these States?
Mr. THOMAS. A great many. This is the case, as you well know, it is up to the individual States to decide in their programs as to which way they will be administered.
A majority have chosen to go the route of the intermediary.